7/10/2012 @ 10:32AM1,102 views

American Eagle Outfitters' Stylish First Quarter Results

Clothing retailer American Eagle Outfitters (AEO) has gained nearly 58% since mid-January, thanks to the company’s focus on improving the direct-to-customer experience, technological advancements such as the e-commerce business, international expansion and its strategy of closing underperforming stores.

The surge in shares for this Zacks #2 Rank (Buy) stock was further amplified by the company’s strong fiscal first quarter 2012 results on May 23, which included a 25% year-over-year rise in earnings and a solid guidance. EPS came in at 20 cents per share, in line with the Zacks Consensus Estimate and up from the prior-year’s 16 cents. The robust quarterly performance was primarily driven by solid top-line growth and an improved operating margin.

During the quarter, American Eagle’s net sales went up 18% year-over-year to $708.7 million, but marginally missed the Zacks estimate of $711 million. Growth in revenue was driven by a 17% increase in comparable store sales, compared with a decline of 7% in the year-ago quarter. During the period, the company’s AE Brand, aerie and AEO Direct segments reported growth of 17%, 20% and 22%, respectively, in comparable store sales.

American Eagle is now forecasting fiscal 2012 earnings per share between $1.16 and $1.22, representing year-over-year growth of 19% to 26%. Comparable-store sales for the period are expected at a mid-single-digit growth. For fiscal second-quarter 2012, American Eagle expects to earn in the range of 13 cents to 15 cents per share, compared with 13 cents in the prior-year period. Moreover, the company still projects to incur a capital expenditure of $100 million in fiscal 2012.

Estimates for American Eagle have shown a considerable upside in the last 60 days. The Zacks estimate for fiscal 2012 moved up 5.1% to $1.23, indicating a year-over-year growth of 42.7%. For fiscal 2013, the estimate increased 5.2% over the same timeframe to $1.41 per share, representing a projected year-over-year growth of nearly 15.2%.

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